Traditionally, many home buyers have put down a full twenty percent on a home, often saving for more if possible. However, with housing booming, this might not be a functional, nor practical approach for those wishing to purchase. What is a reasonable amount of down payment to make on a home purchase? Why would it make sense to put down less money on your new home than you expected?
The Local Market is Booming
If you’re searching home listings already, you’re noticed that local home markets are booming with purchasers. Right now you are in what is known as a “fast-rising market,” which means that homes are being purchased quickly, and, in many places, for more than the asking price. In such instances, rather than wait another year or two, when many properties might rise out of your price range, it could be advantageous if you need that extra space, to go ahead and purchase now, even with a lesser down payment.
Save Cash for Improvements
Because of expert prediction that you will need between 1-4% of your home’s value in repairs per year, and because new homeowners usually pay slightly more for their mortgage than they were before, money is going to be tight for a little while, unless you are thoughtful in advance. This especially applies if you already know there are improvements you want to make to your new home. You can quickly go over budget with a home renovation, and having cash on hand can help.
Great Time For Moving
While pandemic has been stressful, you might have more time for packing and moving. Children who would be missing school friends in a move have already had that experience. Moving always causes upheaval, but because this particular upheaval has already occurred, it might be a healthy time to complete the process with a new start. The cost of rentals has been rising exponentially as well, and it’s critical to factor in those costs while mortgage rates are low.
Only you can know if you are financially ready to purchase, and your lenders and brokers want you to make those wise decisions. Your careful and thoughtful financial decisions are what have made homeownership a possibility for you. It can be wise to benefit from that sooner, rather than later.
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